Amazon Has Considered Buying Some Toys ‘R’ Us Stores(bloomberg.com)
bloomberg.com
Amazon Has Considered Buying Some Toys ‘R’ Us Stores
https://www.bloomberg.com/news/articles/2018-03-19/amazon-is-said-to-have-mulled-acquiring-some-toys-r-us-stores
109 comments
> I personally believe Toys R Us just missed an opportunity to run a proper business.
Toys R Us has been struggling to pay off $6 billion in debt from the Bain Capital takeover in 2005. They didn't have the capital or the margins to invest in maintaining their stores, let alone competing with Amazon.
Buying a company with debt and then forcing that company to pay off that debt is fairly common, but for some reason it surprises me that it's actually legal. Why isn't Bain forced to pay off the debts when the company goes under?
https://www.forbes.com/sites/walterloeb/2018/03/19/bain-capi...
Toys R Us has been struggling to pay off $6 billion in debt from the Bain Capital takeover in 2005. They didn't have the capital or the margins to invest in maintaining their stores, let alone competing with Amazon.
Buying a company with debt and then forcing that company to pay off that debt is fairly common, but for some reason it surprises me that it's actually legal. Why isn't Bain forced to pay off the debts when the company goes under?
https://www.forbes.com/sites/walterloeb/2018/03/19/bain-capi...
To answer your question, the debt holders take precedence over the equity holders like Bain Capital, and generally being an equity holder and having your equity stake wiped to $0 is not a good outcome for a private equity firm. Bain does have to pay off debts - that is what the liquidation of assets is being done for - to pay off debts to the debt holders. Bain doesn't get to keep those assets.
Leveraged buyouts are basically ponzi schemes designed to use recurring revenue to pay back debtors, rather than the usual scheduled lump sum payout down the road.
They were tweaked to work on a different time scale.
The idea they can get some distance to avoid scrutiny.
In a lot of cases, the debtors are also the owners of the firm that initiated the leveraged buyout. They load the target up with debt, can't make the payments, and then they collect as debtors.
See Sears and their current CEO for exactly that model. It's been going on in retail for years. They're all getting boned hard though thanks to Amazon gutting brick-n-mortar retail. OOPS.
Of course the real people being screwed are the folks on main street.
They were tweaked to work on a different time scale.
The idea they can get some distance to avoid scrutiny.
In a lot of cases, the debtors are also the owners of the firm that initiated the leveraged buyout. They load the target up with debt, can't make the payments, and then they collect as debtors.
See Sears and their current CEO for exactly that model. It's been going on in retail for years. They're all getting boned hard though thanks to Amazon gutting brick-n-mortar retail. OOPS.
Of course the real people being screwed are the folks on main street.
This assumes they occur post bankruptcy. Looting a company involves dept then dividends from selling off assets to the point a company can't make debt payments. The money is already gone by the time the company can't pay, so they don't care what happens to the shell at that point.
Except, I think the rub here is that Bain will have paid itself enormous consulting fees from toys r us coffers.
My guess is that they come out ahead even after the bankruptcy. They would have put some of their own money in to purchase equity but my guess is, not more than fees would amount to after a decade.
My guess is that they come out ahead even after the bankruptcy. They would have put some of their own money in to purchase equity but my guess is, not more than fees would amount to after a decade.
Isn't that the nature of a business in America? It acts as a "corporate veil" and as long as you aren't using business funds inappropriately, the business is the "last stop".
The person you are replying to is making a point about leveraged buyouts and how they can be used by unscrupulous wall street types to milk and destroy an otherwise profitable industry.
https://www.rollingstone.com/politics/news/greed-and-debt-th...
https://www.rollingstone.com/politics/news/greed-and-debt-th...
Well the natural extension of what you ask, is a world like Japan where banks ask small and medium business owners for personal guarantees over business loans, bankrupting many SMB owners and entrepreneurs.
It's not mom and pop lenders that put up 6 billion. It's grownups that have a contract with a specific set of things/entities they can collect from. Don't waste tears over them.
Nobody cares about the banks. But the banks are going after Toys R Us (and other targets of the parasitic buyouts) because that's their only recourse, and they are costing plenty of innocent people their jobs. I feel things would be different if they could go directly after Bain et al.
Yeah no. If the stores were worth keeping open without the debt, then the bankruptcy court would keep them open. They lost money in each of the last 4 years, without as much of a debt load maybe they'd have broken even or a small profit, but not enough to justify the existence of the company.
You're falling into the trap of assuming that the market is perfect, and that there's someone wanting to take over the stores.
Face it, the only reason they were in trouble, and the only reason this bankruptcy is happening, is because of the parasitic capital firms involved.
Face it, the only reason they were in trouble, and the only reason this bankruptcy is happening, is because of the parasitic capital firms involved.
You can do the math, it's not that hard.
Toys r US's numbers were significantly below where they'd need to be at to survive. It's unclear why you think we should infringe on banks ability to decide who to lend money to and what collateral to require.
Toys r US's numbers were significantly below where they'd need to be at to survive. It's unclear why you think we should infringe on banks ability to decide who to lend money to and what collateral to require.
It's important to note that a lot of the failure of Toys R Us has to do with private equity buyout rather than a poor business model. Of course, their business model was flawed, but remember that Toys R Us was bought in 2005, and the toy market was MUCH simpler back then. Amazon was hardly the player it is now. The private equity firm then loaded them up with crippling debt. Move forward a few years, and enter Amazon et al, and market situations shifted drastically. Toys R Us, loaded with debt from the private equity buyout, could not invest in their own infrastructure and improvements. Even if they had the perfect business model to capitalize on, they would have no cash to execute, and regardless, they would be forced to bankruptcy. In this case, they had so much debt that they couldn't escape chapter 11 and had to resort to chapter 7. And so it goes.
Cite for the above: https://www.bloomberg.com/news/articles/2018-03-16/who-kille...
Buy company. Take out massive debts on company's books. Withdraw hundreds of millions in "fees". Let company collapse. Rinse, repeat.
Buy company. Take out massive debts on company's books. Withdraw hundreds of millions in "fees". Let company collapse. Rinse, repeat.
NY Times also has a good article on it: https://www.nytimes.com/2018/03/15/business/toys-r-us-bankru...
Taking a corporation private, loading it with billions in debt, starving it of funding and sucking it dry before collapse should be a criminal offense IMO
Unfortunately that's the nature of business. Sometimes it's impossible to predict market situations 10, 15 years out. I doubt anybody at Bain could have predicted in 2005 that Amazon would completely dominate the retail market in 10 years. Also, some responsibility falls on the debtors themselves for taking on potentially risky investments, but there are so many loopholes and gotchas here that I really can't comment much on that. While this type of private equity story seems more and more common these days, the opposite happens fairly often as well, and private equity firms like Bain make insane amounts of money from these types of strategies.
Bankruptcy in general is shady though and no matter what, when it happens, somebody is getting screwed out of a lot of money... usually the debtors.
Bankruptcy in general is shady though and no matter what, when it happens, somebody is getting screwed out of a lot of money... usually the debtors.
Excusing this as "the nature of business" is extremely defeatist. We could easily make it so that Bain is back on the hook for these debts, so that they actually care about the outcome of the company.
Keep in mind, Toys R Us had some 20% of the online toy market. And without the debt hanging around their neck, they'd actually have funds to invest in competing.
Keep in mind, Toys R Us had some 20% of the online toy market. And without the debt hanging around their neck, they'd actually have funds to invest in competing.
I don't think you fully understand how this works. Bain doesn't get off the hook here with zero losses. In these bankruptcy situations, equity holds (Bain) usually get their equity stake wiped completely. If they had hundreds of millions/billions of dollars in equity, all of that is now gone. They will recover some of the money from the liquidation of assets however they will immediately use that to pay of their own debts. The debtors however get screwed even further... most if not all of them get absolutely nothing.
"Bain doesn't get off the hook here with zero losses."
They make the company pay them dividends while saddling the company with their debt.
"The debtors however get screwed even further... most if not all of them get absolutely nothing."
And yet, they keep lending to these vultures. I have no sympathy.
They make the company pay them dividends while saddling the company with their debt.
"The debtors however get screwed even further... most if not all of them get absolutely nothing."
And yet, they keep lending to these vultures. I have no sympathy.
> They make the company pay them dividends while saddling the company with their debt.
Yes that is true. Is the sum of dividends over X years >= the amount of equity wiped out in a Chapter 7 liquidation? Impossible to say... the company is private.
> They make
They didn't make them do anything. They bought the company... they can do what they want as owners. That's just how this game works.
Yes that is true. Is the sum of dividends over X years >= the amount of equity wiped out in a Chapter 7 liquidation? Impossible to say... the company is private.
> They make
They didn't make them do anything. They bought the company... they can do what they want as owners. That's just how this game works.
And that's not a good enough argument anymore. They did force this upon the company, and they are feeling absolutely none of the consequences of their decision.
> they are feeling absolutely none of the consequences of their decision
Man I wish I knew the fine details of the books of a multi-billion dollar private equity firm like you do.
Man I wish I knew the fine details of the books of a multi-billion dollar private equity firm like you do.
How could Bain not predict that Amazon would dominate toy sells?
Toys R Us made a 10 year deal with Amazon to be the exclusuve toy seller in 1999, that had already fallen apart by 2005. Amazon was already the top online toy reteller by then. As far as debtors being "screwed", hopefully they are both diversified enough and demanded enough of a risk premium for them to at least break even on their entire portfolio of loans.
https://qz.com/1080389/a-dot-com-era-deal-with-amazon-marked...
Toys R Us made a 10 year deal with Amazon to be the exclusuve toy seller in 1999, that had already fallen apart by 2005. Amazon was already the top online toy reteller by then. As far as debtors being "screwed", hopefully they are both diversified enough and demanded enough of a risk premium for them to at least break even on their entire portfolio of loans.
https://qz.com/1080389/a-dot-com-era-deal-with-amazon-marked...
"Fallen apart" is a nice way to put it. Another way to put it is that Amazon duped Toy's R Us into a terrible deal, learned everything they could about the toy market, then dumped them and violated their contract knowing that regardless of proceeding lawsuits (which Toys won) they would dominate the online toy space in the future. Everybody here blaming Bain, when the reality is that Toy R Us got thoroughly outplayed in the online space and never learned their lesson.
These were supposedly smart business people. You are always in danger when you outsource something that should be your core competency.
Apple learned that lesson a decade ago. If you look at the post Steve Jobs Apple, they brought more in house - retail, chip design, software, and rumors are they are trying to bring screen design more in house. Anything else, they try desperately not to depend on one supplier - commoditizing their compliments. (https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/)
Apple learned that lesson a decade ago. If you look at the post Steve Jobs Apple, they brought more in house - retail, chip design, software, and rumors are they are trying to bring screen design more in house. Anything else, they try desperately not to depend on one supplier - commoditizing their compliments. (https://www.joelonsoftware.com/2002/06/12/strategy-letter-v/)
Amazon doesn't dominate the retail market. Walmart still has much higher retail revenue.
I think the terms of the loans matter a little bit.
If the money is coming from investors that are getting bad advice, that's a problem. If Warren Buffett wants to risk $4 billion on some Bain scheme, meh.
If the money is coming from investors that are getting bad advice, that's a problem. If Warren Buffett wants to risk $4 billion on some Bain scheme, meh.
Private equity deals where a major employer is loaded with debts on purchase usually cripple the company and turn it into an also ran. You'd think politicians would insert themselves at this point particularly when companies collapse. TRU is by no means the first company this has happened to.
Manchester United in the UK were bought and loaded up with debt. They are ok now as the team is doing well, but if they stumble there is a colossal mountain of debt that still needs servicing regardless.
The whole concept of being allowed to financialize delicate businesses needs more regulation IMO
Manchester United in the UK were bought and loaded up with debt. They are ok now as the team is doing well, but if they stumble there is a colossal mountain of debt that still needs servicing regardless.
The whole concept of being allowed to financialize delicate businesses needs more regulation IMO
Are the companies that are writing these massive debts actually making money at the end of the day though? If that stops then the whole industry and practice will stop.
Generally yes. Otherwise they don’t do them. But when the market gets frothy, a bunch lose at once. (And the life insurance companies and pensions counting on them get hurt)
Can you or someone else explain to me why a firm would buy a company, and then "load them with debt"?
Was the debt intended to help them grow?
Was the debt intended to help them grow?
A leveraged buy out like the one Bain Capital used here is often used to milk cashflow and value out of a business that is in a bad position. They essentially seized on the opportunity that Toys R Us' bad decisions left them in to buy them with debt and use them as an ATM. I suspect that Bain didn't care about letting them grow, and saw this as an opportunity to bleed out all value from them for their remaining years until they could file for bankruptcy and liquidate.
No, the debt is intended to give them leverage. Have $300 million but want to get the returns of having a $3 billion company? Use debt to make up the difference, make $600 million if the value goes up 20%, and leave some pension fund dumbasses holding the bag if the price goes down 20%.
Their current business model is (was?) to price everything in the store 5-20% higher than elsewhere, but then offer coupons, sales, etc. to offset that.
When our daughter was born we price compared them for a lot of big ticket items, but ultimately just bought online or at Target / Walmart.
A few times a year they have a good deal on something (again with coupons) so we purchase, but walking into the store blind shopping is basically just paying a 15% corporate convenience fee.
If they were price competitive with others, I would have stopped in there a lot more, but oh well.
When our daughter was born we price compared them for a lot of big ticket items, but ultimately just bought online or at Target / Walmart.
A few times a year they have a good deal on something (again with coupons) so we purchase, but walking into the store blind shopping is basically just paying a 15% corporate convenience fee.
If they were price competitive with others, I would have stopped in there a lot more, but oh well.
Their abhorrent aka non-existent return policies too. I am not a serial returner, but the inability to do so doesn't help in their favor when I am making a decision on where to buy.
They will price match with other stores. I was in there last weekend to spend a gift card and knocked about 20% off the prices by price matching Amazon.
> There's nothing suburban parents like me want more than an indoor play space for my kid (for extremely hot or cold days)
Funny enough, a new cafe opened up a few blocks from where I live with this in mind. About half of the customer space is a play area for smallish children, and the other half is "normal" with tables and chairs... My point being that it doesn't need to be limited to toy stores or kiddie museums, even if this particular cafe boards up shop.
Funny enough, a new cafe opened up a few blocks from where I live with this in mind. About half of the customer space is a play area for smallish children, and the other half is "normal" with tables and chairs... My point being that it doesn't need to be limited to toy stores or kiddie museums, even if this particular cafe boards up shop.
Youre right. There's something unclean and bad about the aesthetics...its like stuck in the 1980s. They need someone that can redesign and modernize it. Whoever did that work for Target would probably know what precisely to do.
That Target guy is Ron Johnson, the same one who built Apple retail and tried to help JC Penney
He almost destroyed JC Penney
JC Penney had failed before they brought him in. It's now just slowly dying. They've even had to sell off their HQ http://fortune.com/2017/01/03/jcpenney-headquarters-debt/
Perhaps, but there was almost no positive returns from his ideas there. He seemed to fundamentally misunderstand the JC Penney customer. I don't think it was a case of abandoning a good plan due to lack of patience, the entire strategy (eliminate sales, make it like a mini mall with its own sub stores) seemed ill conceived and was a disaster.
I hadn't been in a Target in awhile, but popped in an intown location the other day.
Wow.
I was definitely impressed. For a chain that used to be "the other Walmart", the design and general feel of the store was miles different today.
So hats off to Mr. Johnson, and Target for hiring him.
Side note: Having a Starbucks in-store at Targets is brilliant. I imagine the deal works out financially for both parties, and Target gets to affluence-signal "we're the type of store that Starbucks people shop at."
Wow.
I was definitely impressed. For a chain that used to be "the other Walmart", the design and general feel of the store was miles different today.
So hats off to Mr. Johnson, and Target for hiring him.
Side note: Having a Starbucks in-store at Targets is brilliant. I imagine the deal works out financially for both parties, and Target gets to affluence-signal "we're the type of store that Starbucks people shop at."
Target has been actively renovating their stores in the last few years to make them more like...Crate & Barrel I guess?
The ones that haven't gone through the transition yet still do have that 90s warehouse feel of a more expensive Wal-Mart.
The ones that haven't gone through the transition yet still do have that 90s warehouse feel of a more expensive Wal-Mart.
I think it’s the grid layout, the modular, beige metal racks, and linoleum, and the fluorescent lights. Plus their color scheme where there is color seems to be from the Ronald McDonald school of design. Finally, tired and miserable people at supermarket-like checkout lanes doesn’t help.
Reminds me of the story of Disneyland:
"The concept for Disneyland began when Walt Disney was visiting Griffith Park in Los Angeles with his daughters Diane and Sharon. While watching them ride the merry-go-round, he came up with the idea of a place where adults and their children could go and have fun together, though his dream lay dormant for many years"
It seems like in this experience economy when we all have enough basic material goods, there should be a market for something like what your describing.
"The concept for Disneyland began when Walt Disney was visiting Griffith Park in Los Angeles with his daughters Diane and Sharon. While watching them ride the merry-go-round, he came up with the idea of a place where adults and their children could go and have fun together, though his dream lay dormant for many years"
It seems like in this experience economy when we all have enough basic material goods, there should be a market for something like what your describing.
Maybe their operations were suboptimal, I don't know - but the PRIMARY reason they went under is because Bain Capital conducted an LBO, sucked a ton of value out from coupon payments, pushed its own debt obligations back onto Toys R Us, then left it to die.
Once more, for those in the back:
Toys R Us was profitable. Period.
They were acquired by predatory capital companies (Bain Capital) via a leveraged buyout which loaded them down with huge debt repayments. The new owners extracted massive amounts of money from Toys R Us and then let them die as they were crushed under their debt burden.
This is not a story of a company that failed to keep up with modern times, Toys R Us had a long profitable life ahead of it. This is a story of corporate predation, one company killing another in order to feast on the carcass. Bain Capital basically pocketed hundreds of millions of dollars while leaving Toys R Us customers and employees as well as private banks holding the bag.
Toys R Us was profitable. Period.
They were acquired by predatory capital companies (Bain Capital) via a leveraged buyout which loaded them down with huge debt repayments. The new owners extracted massive amounts of money from Toys R Us and then let them die as they were crushed under their debt burden.
This is not a story of a company that failed to keep up with modern times, Toys R Us had a long profitable life ahead of it. This is a story of corporate predation, one company killing another in order to feast on the carcass. Bain Capital basically pocketed hundreds of millions of dollars while leaving Toys R Us customers and employees as well as private banks holding the bag.
How does running a play space with lots of staff fit into Amazon's business model?
How may physical stores complain that shoppers go in, examine the objects on the shelf, and then compare to Amazon via their phone to just finish the purchase there?
If Amazon ran the store, they could just buy it right there @ Amazon prices, and within the Amazon ecosystem That would kill the other stores.
If Amazon ran the store, they could just buy it right there @ Amazon prices, and within the Amazon ecosystem That would kill the other stores.
If Amazon ran the store, they would have the same retail overhead costs as all the places they're undercutting...
Issue is, a company does that and then parents still search and buy the toy for cheaper on Amazon from their phone.
I have family members who run a small retail store with excellent inventory and service, and they barely scrape by due to people show rooming. They are not in toys, but they simply cannot compete on price, as Amazon, etc sells it cheaper than they can buy from the suppliers.
I have family members who run a small retail store with excellent inventory and service, and they barely scrape by due to people show rooming. They are not in toys, but they simply cannot compete on price, as Amazon, etc sells it cheaper than they can buy from the suppliers.
People will generally pay a premium for better service, but in the case of retail, it's usually hard to beat the service of "instant purchase with free two day delivery to my doorstep". I for one, very rarely buy something w/o checking if it's cheaper on Amazon (or some other online retailer) first. It's gotta be a tough market that's for sure.
Ironically though I don't think Amazon often offers the best prices.
On various 'crapware' (cables etc), eBay is cheaper (especially if it is an 'addon' item and you have to pay for shipping).
For larger purchases I've done usually a different online store has similar prices, but a free extended warranty/accessory.
On various 'crapware' (cables etc), eBay is cheaper (especially if it is an 'addon' item and you have to pay for shipping).
For larger purchases I've done usually a different online store has similar prices, but a free extended warranty/accessory.
it's been a couple of years since I went into a toys r us, but the reason why I stopped going wasn't the very messy store, nor the lack of inventory, but the prices being about 20% above MSRP, especially when I can go to a specialty store a couple of blocks away and pay MSRP for a lot more inventory.
I think that the idea of a "destination store" has been dying a slow death, and making them a lot more unattractive is accelerating this.
as for toys, I found myself paying a little over MSRP (not 20%) at my local walking-distance boutique store, but mostly because it was in my neighborhood.
I think that the idea of a "destination store" has been dying a slow death, and making them a lot more unattractive is accelerating this.
as for toys, I found myself paying a little over MSRP (not 20%) at my local walking-distance boutique store, but mostly because it was in my neighborhood.
If Amazon sells it cheaper, they could act somewhat as an Amazon affiliate. Or at least buy from Amazon instead of their more expensive suppliers.
Probably amazon buys it from the same supplier, but they can sell it for less margin, because they don't have the overhead of running a store, and they have the scale of being amazon.
> sells it cheaper than they can buy from the suppliers
Perhaps they miswrote, but the comment says that Amazon is cheaper than the supplier.
It's somewhat common for a large manufacturer to accidentally undercut themselves. For example, one branch selling to Walmart and another selling direct to restaurants. Sometimes the price at Walmart, even after Walmart's margin, is cheaper than the direct price. The restaurant-sales group is horrified as they lose customers to Walmart and goes running down the hall to tell the bigbox-sales group to raise prices.
Perhaps they miswrote, but the comment says that Amazon is cheaper than the supplier.
It's somewhat common for a large manufacturer to accidentally undercut themselves. For example, one branch selling to Walmart and another selling direct to restaurants. Sometimes the price at Walmart, even after Walmart's margin, is cheaper than the direct price. The restaurant-sales group is horrified as they lose customers to Walmart and goes running down the hall to tell the bigbox-sales group to raise prices.
Amazon seems only interested in buying the real estate, not the Toys R Us brand or business. Here's a quote from the article:
"The online giant isn’t interested in maintaining the Toys “R” Us brand, but has considered using the soon-to-be-vacant spaces for its own purposes, said the people, who asked not to be identified because the talks are private."
"The online giant isn’t interested in maintaining the Toys “R” Us brand, but has considered using the soon-to-be-vacant spaces for its own purposes, said the people, who asked not to be identified because the talks are private."
Toys R Us had a proper business. If they didn't get saddled by debt thanks to private equity, they'd still be around.
The private equity practice of saddling the company you're buying with the debt you used to buy it should be banned. There is absolutely nothing worthwhile that comes from it.
The private equity practice of saddling the company you're buying with the debt you used to buy it should be banned. There is absolutely nothing worthwhile that comes from it.
Since nobody else thought it appropriate to mention, I'll bite the bullet: the person you're imagining being playful with the toys to see which one your kid likes has historically been you.
This sounds like a nightmare, though. Obviously people go to mall play areas and whatnot already for the scenarios you mentioned, but the germs and everything to deal with would be even worse for this IMO.
Shit everywhere, no one to help you find anything, etc...
It would fit right in with Amazons style of business then.
It would fit right in with Amazons style of business then.
Amazon has a search engine, recommendations, and 24/7 customer support to help you find what ever you need.
Amazon customer support helps you select items to buy?
24/7 customer support: TIL
But that's the whole point, if both are the same on that aspect, and amazon has a larger catalog size, and I already have evening/next day delivery from amazon anyway, why would I bother going the to the toy store ?
The whole point he was making is, once amazon existed, they failed to compete with it. You're a physical store, you have the possibility to interact with people, offer them things they can't have over the internet, use it. If you don't, you're wasting a lot of money on prime rent.
The whole point he was making is, once amazon existed, they failed to compete with it. You're a physical store, you have the possibility to interact with people, offer them things they can't have over the internet, use it. If you don't, you're wasting a lot of money on prime rent.
As I posted previously, toys r us didn't just "fail to compete with them", they actually helped Amazon to build their own department by turning over responsibility of toysrus.com to Amazon.
After visiting retail Amazon bookstores on more than one occasion, I have to strongly disagree with your vision of possible Amazon retail ventures.
On the topic of toy stores / toy store innovation, that American Girl doll store is insane. My wife and I went there to buy a doll for our friend's daughter for Christmas and holy hell is that place busy / kinda weird. It's like a Bloomingdale's or something for dolls. Kids can even sign up for "doll spas" and bring their dolls in to have their hair and nails done and stuff. Obviously I don't really get it because I'm not an 8 year old girl, nor do I have any kids but that place must be making a ton of money.
This is part of the reason that IMO a lot of retail is failing ... customers don't want or need a static display of inventory; they can easily get that from their already-installed Amazon app. Retail needs to evolve to be an event destination ... a place that gives the consumer a _reason_ to get out of the house and go there. A place where they can experience something other than just simple consumption.
Obviously, not every single storefront needs to be that (grocery stores come to mind) ... but for the average mall, no one wants to actually go there and walk around any more. The mall needs to be a place that entices people to go there and simply exist ... do stuff, hang out with people, even if they spend no money at all.
Obviously, not every single storefront needs to be that (grocery stores come to mind) ... but for the average mall, no one wants to actually go there and walk around any more. The mall needs to be a place that entices people to go there and simply exist ... do stuff, hang out with people, even if they spend no money at all.
Radio Shack should have tried to evolve into maker spaces rather than cell phone stores.
The number of times I was working on an electronics product and went to Radio Shack to try to find a quick replacement for the resistor or motor I just fried is crazy... and the crazier part is they never once had the part I needed yet I kept coming back because it's the only store I could think of that might have it.
Arduino and Rapsberry Pi should have been their saving grace. Not cheap RC cars.
Arduino and Rapsberry Pi should have been their saving grace. Not cheap RC cars.
I agree, but they were out of the parts business well before Arduino and Raspberry Pi were a thing. The last Radio Shack in my area that stocked resistors closed in 2006. There's none near me now, but since ~2000 they'd been mostly phone stores that also carried the occasional batteries and cables.
They had gotten kinda back into the parts business within the last ~5 years or so? At least the ones near me did. They were starting to embrace the maker movement, and was at least dedicating some space to them.
Radioshack in the 1980s/90s was like the original maker space. I bought so many circuit boards and magnets and batteries there. Their staff all knew their stuff too.
They kind of did at the very end. They were at least dedicating some space to it, but I think it was too little too late.
yep, my local radio shack, in the end, started to start stocking some interesting stuff ... and they had a series of drawers that had a variety of resistors, leds, and other such things that you could pick through. But as you said, too little too late. They could have taken the lead on the maker movement, given that they had the infrastructure in place ... but despite them having this stuff, the workers knew little to nothing anytime I asked them a question, they were just there to take the money at POS and restock the shelves :(
I had so hoped that at one point Fry's would buy out all the Radio Shack locations and make them out to be Frontier Fry's Locations that was more tuned to hyper local Maker Scenes.
FWIW American Girl is owned by Mattel and Mattel is not doing well at all, in large part because American Girl is dying.
https://www.marketwatch.com/story/mattel-shares-plunge-as-no...
https://www.marketwatch.com/story/mattel-shares-plunge-as-no...
People are not getting it.
If they are going to get into the business ( acquiring retail space) it will be one that fits into their equation for their last mile problem and be at fire sale prices.
If they choose to purchase retail real estate, it will most likely be a combination of retail/grocery/banking all in one, sort of like a Walmart, but way better experience.
This most likely will be their approach to get baby boomers to shop and to learn how to shop online.
As everyone knows, Amazon loves getting things cheaply and will do so if they can.
> Webvan was an online grocery business that went bankrupt in 2001 after 3 years of operation and was later folded into Amazon.com.
> CNET named Webvan one of the largest dot-com flops in history
> Webvan placed a $1 billion order with engineering company Bechtel Corporation to build its warehouses, and bought a fleet of delivery trucks.
> In 2000, Webvan bought HomeGrocer, a competitor that was also losing money, for $1.2 billion in stock.[11][12] At its peak in 2000, Webvan had $178.5 million in sales but it also had $525.4 million in expenses.
(https://en.wikipedia.org/wiki/Webvan)
If they are going to get into the business ( acquiring retail space) it will be one that fits into their equation for their last mile problem and be at fire sale prices.
If they choose to purchase retail real estate, it will most likely be a combination of retail/grocery/banking all in one, sort of like a Walmart, but way better experience.
This most likely will be their approach to get baby boomers to shop and to learn how to shop online.
As everyone knows, Amazon loves getting things cheaply and will do so if they can.
> Webvan was an online grocery business that went bankrupt in 2001 after 3 years of operation and was later folded into Amazon.com.
> CNET named Webvan one of the largest dot-com flops in history
> Webvan placed a $1 billion order with engineering company Bechtel Corporation to build its warehouses, and bought a fleet of delivery trucks.
> In 2000, Webvan bought HomeGrocer, a competitor that was also losing money, for $1.2 billion in stock.[11][12] At its peak in 2000, Webvan had $178.5 million in sales but it also had $525.4 million in expenses.
(https://en.wikipedia.org/wiki/Webvan)
I mean there has to be an non-dilapidated Toy 'R' Us location somewhere right?
I imagine they're more interested in the location and store size than how recent the tile has been replaced.
These are. I've been to one. Not a bad store at all. Resurrecting a highly nostalgic brand may be a viable option, if Amazon has some trick up their sleeves. The one thing they can't fix is low birth rates though, so it would have to transform the stores a bit.
Whole Foods me.
As a parent, put a craft beer/craft coffee in my hand (mark that up too, I'll pay) and give my kids and myself an experience, more than just a static display.
Blicks, a store for art supplies has done this with wine nights, painting lessons (with wine), etc.
Ignoring all the damn alcohol, it's brands that will compete by creating an experience that may stand a chance (IMO)
As a parent, put a craft beer/craft coffee in my hand (mark that up too, I'll pay) and give my kids and myself an experience, more than just a static display.
Blicks, a store for art supplies has done this with wine nights, painting lessons (with wine), etc.
Ignoring all the damn alcohol, it's brands that will compete by creating an experience that may stand a chance (IMO)
Maybe if they combined it with some maker stuff --however, I think perhaps the maker stuff has a too limited audience. And besides, their locations do not lend themselves much to drop-ins. Like, while I'm at it buying something at [some place] I'll drop in at Toys R Us. They tend to be in out of the way locations.
Toys'R'Us was the victim of a leveraged buyout in 2005. The business hasn't been doing all that poorly, just not well enough to pay off all the debt. So capex is taking a backseat to debt servicing. It's a slow-motion train wreck.
The same thing just happened to Clear Channel. The bankruptcies aren't likely to kill off the business, but hand ownership over to the debt holders.
The same thing just happened to Clear Channel. The bankruptcies aren't likely to kill off the business, but hand ownership over to the debt holders.
The one in Portsmouth, NH is perfectly nice inside and not dated-looking.
There are, I live near one in Sunnyvale, CA, and it's awesome. It's got more hot wheels cars than I ever want to play around with.
The Canadian stores were very well kept and actually performed so well that MGA Entertainment (Bratz dolls, etc) was trying to get a group of other toymakers together to try and keep those stores open.
> Additional stores would give Amazon space to showcase its popular Echo line of devices, which run on the Alexa voice-activated platform.
I'm pretty sure they're not going to buy a big box retailer to jam a bunch of echos into it.
I'm pretty sure they're not going to buy a big box retailer to jam a bunch of echos into it.
Would be fun to say something over intercom, then hear hundreds of echos answer back.
The article is full of speculations like these. It's as if they didn't have enough content but needed to hit certain number of words.
They already have one in Seattle with a large section dedicated to Echos and Kindles, so it's not without precedent for them.
Now why an ecommerce giant is retrogressing to brick and mortar I can't imagine.
Now why an ecommerce giant is retrogressing to brick and mortar I can't imagine.
It's just an additional sales channel ... if they can have a place where a) people can go to physically preview inventory, and b) can go to immediately obtain merchandise when they can't wait for it.
Additionally, it can help to simplify logistics ... if there are more locations where they person can go pick up their package rather than having to deliver it, surely that can be a boon to their operations.
Additionally, it can help to simplify logistics ... if there are more locations where they person can go pick up their package rather than having to deliver it, surely that can be a boon to their operations.
So they can same-day-deliver to my house in [not a big city].
Obviously they would sell other things too.
But the Echos would likely be front and center. The toys for enriching young children would be replaced by toys for enriching young AI. It's like a private hell designed specifically for a toy store.
But the Echos would likely be front and center. The toys for enriching young children would be replaced by toys for enriching young AI. It's like a private hell designed specifically for a toy store.
The Echo has amazing potential for toys. There's already a large selection of "speaking" toys for boys and girls of all ages, from dolls to board games. All would profit from an Alexa-like technology level. But unless you want your children to order a few pounds of ice cream from Amazon Fresh, you would have to remove the Amazon store part from the kid's Echo (or have much better voice recognition).
It would be beneficial for Amazon in the long run (making people more at ease with voice assistants), but I doubt that this would be the reason for Amazon to buy ToysRUs
It would be beneficial for Amazon in the long run (making people more at ease with voice assistants), but I doubt that this would be the reason for Amazon to buy ToysRUs
They should buy all of them, use them as display space for a wide variety of Stuff, and continue shipping normally except for small items that can be sold at point of sale and stored at low overhead.
As a parent of young kids, I've been in to Toys R Us twice in the past few years. The first time it was really depressing: prime-time hours for retail and the store was practically empty. The second time was last weekend, and it was bustling with people hoping for fire sale prices. Probably the best weekend that store has had in years.
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I personally believe Toys R Us just missed an opportunity to run a proper business. They have a ton of retail space, but every time I've been there, it's run like Walmart. Shit everywhere, no one to help you find anything, etc...
There's nothing suburban parents like me want more than an indoor play space for my kid (for extremely hot or cold days). If they properly utilized their store and made it more like a play space, I would bring my kid there every weekend.
Right now I am paying money to go to those "kids museum". Why didn't Toys R Us think to capitalize on that market?
Also, if they had people to playfully demo the toys to my kid, I am pretty sure we would buy way more toys instead of just leaving frustrated because we can't find what we wanted.